How Does Marriage Affect the Allocation of Assets in Women’s Defined Contribution Plans?

Past studies that examine gender differences in investment decisions have treated married households as a single decision- making unit. This study improves upon traditional unitary bargaining models and estimates a series of unitary and collective-type models to investigate how a husband’s age and relative control over financial resources affects the allocation of assets in women’s defined contribution plans. Using data from the Survey of Consumer Finances, the results show that women who are married to less educated and older men are less likely to take on risk with their portfolios. Women who earn a greater share of the household’s total earnings are also less likely to invest in risky assets. There is little evidence that the characteristics of the wife affect the husband’s investment decisions. The findings have important policy implications, especially with respect to proposed Social Security reforms which would enable workers to choose how their personal security accounts are invested.